Should i take a step back?

[ElRaja]

Hi guys, just wanted your opinion about a bit of a dilemma i am in.

I started investing my money about 18 months ago, back then I had no idea about technical analysis. I bought and sold equities irrespective of the price action, solely on fundamentals and made a return i was satisfied with.

I then started to read about TA and got intrigued, i started applying moving averages, macd, slow stochastics, and support resistance lines to time the buy and sells which were based upon my fundamental opinions.

this proved really successful in squeezing out a bit more out of each investment and was clearly improving my returns.

I thought id take the next step and trade short term based only on the technical indicators. My first such trade I missed a point to sell, and got out break even luckily, .

I had a cardinal rule to not place a trade unless i had immediate internet access since i was trading via ETFs through halifax share dealer, and they dont give me stops.

anyhoo, i broke my rule and my second trade went totally wrong and I lost about 20odd percent on that trade.

My confidence has taken a bit of a knock, and i dont feel like i should trade for the next few weeks, as i am quite occupied with other things too, but a part of me says that i need to keep doing it because that's the only way ill learn.

Or is it that some people are good at certain things, and i shouldnt bother with TA?

p.s. im overall split (75% long term investments, 25% cash to trade with)

any opinions would be greatly appreciated. thanks guys.

 

[amit1986]

Or is it that some people are good at certain things, and i shouldnt bother with TA?

I don't quite understand your logic. You started using technical analysis and made some money; then you broke your "rule" and put on a trade without having internet access and you lost money. How does that loss have anything to do with your ability to use TA?

 

[ElRaja]

I don't quite understand your logic. You started using technical analysis and made some money; then you broke your "rule" and put on a trade without having internet access and you lost money. How does that loss have anything to do with your ability to use TA?

i didnt word myself properly, i meant to say i shouldnt bother trading only based on TA.

tbh u have a fair point, maybe i was just rambling, lols.

the original q still stands would it make sense to take time out or to not let it influence me?

 

[bbmac]

From the summary you have given in your post above there are 3 questions you should ask yourself

1. You say you were trading purely on fundamentals and was making a '..return I was satisfied with' Why then get off a winning horse ?

2. Why did you think that trading short term based on tech indicators was as you put it '...the next step...?'

3. Losing 20% on one trade is bad money management whatever your reason re internet access / trade vehicle. Do you not think that this is so?

The best advice may be - Stick with what you know 100% and what you were satisfied with -or- if you do wish to split your available margin as you suggest - then like your fundamental trading edge that uses 75% of your margin, using technicals needs you will need one too, as well as proper/sensible money management optimised to that trading edge. This is to say nothing of a robust psychological framework to ensure that you can execute the trading edge profitably, and consistently profitably.

G/L

 

[amit1986]

You need an edge in this game to survive in the long-term. You might find you have some good trades initially using basic systems based on MACD, BollingerBands, etc...but you need to bring a unique skill to the table - something that sets you apart from everyone else, not just some techniques you read about in a book on technical analysis. That skill takes a lot of time and experience to develop. You know what you did wrong - just make sure you don't do it again. If one stumble makes you want to give up, then I'm afraid you are in for a big surprise. This is a tough game and it requires the heart of a lion.


Good luck.

 

[Masquerade]

Losing 20% in a share is not awful. Some of the small caps can easily move 5-10% in a day on average and a few bad days due to macro reasons and you're easily in a 20% loss. The trick is to not put all your money in one share.

If you are doing your research properly you are better off sticking to fundamentals and just use technical analysis to pinpoint good entry/exit areas. But forget all that MACD, moving averages bull****.

Should you stop? Well that depends, do you want to stop because you're scared or you can't commit the time to it. All traders have their setbacks (I did this week) but you know what I did? I was there the next day trying to put it behind me and move on.

 

[Liquid validity]

Hi guys, just wanted your opinion about a bit of a dilemma i am in.

I started investing my money about 18 months ago, back then I had no idea about technical analysis. I bought and sold equities irrespective of the price action, solely on fundamentals and made a return i was satisfied with.

I then started to read about TA and got intrigued, i started applying moving averages, macd, slow stochastics, and support resistance lines to time the buy and sells which were based upon my fundamental opinions.

this proved really successful in squeezing out a bit more out of each investment and was clearly improving my returns.

I thought id take the next step and trade short term based only on the technical indicators. My first such trade I missed a point to sell, and got out break even luckily, .

I had a cardinal rule to not place a trade unless i had immediate internet access since i was trading via ETFs through halifax share dealer, and they dont give me stops.

anyhoo, i broke my rule and my second trade went totally wrong and I lost about 20odd percent on that trade.

My confidence has taken a bit of a knock, and i dont feel like i should trade for the next few weeks, as i am quite occupied with other things too, but a part of me says that i need to keep doing it because that's the only way ill learn.

Or is it that some people are good at certain things, and i shouldnt bother with TA?

p.s. im overall split (75% long term investments, 25% cash to trade with)

any opinions would be greatly appreciated. thanks guys.

There's your primary problem, if it is true you can't place a stop, close your halifax account pronto and get a decent broker.
Never trade without a stop.
Then practise more with low stakes / demo.

 

[Black Swan]

Why are you/what is your definition of "short term trading"? And if it's equities why aren't you using SB or cfds?

 

[jiggly]

you should certainly stop walking your current path.

you took a wrong turn which was sign posted : Trade a shorter timeframe and you will make more money thorugh more opportunities to trade > this way!.

backtrack and continue down the original road.